Highlands woman gets flood insurance shocker

Claudette D'Arrigo elevated her home in Highlands, NJ, after Hurricane Sandy but now faces high insurance coverage costs. Here, she holds a photo on her tablet that shows this same room but gutted and before it was elevated to the second story. Photo was taken June 16, 2014. /Russ DeSantis/Special to the Asbury Park Press / ASB 06xx flood insurance(Photo: Russ DeSantis, Russ DeSantis)

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Claudette D'Arrigo and her husband were expecting an annual premium of $3,000, but ended up being quoted at $34,396.

FEMA eventually approved a reduction to $7,728, but D'Arrigo said she thought her premium would be $600 after all the improvements they made.

HIGHLANDS – One day in late May, Claudette D'Arrigo drove her red Ford F-250 past the unfinished or never started reconstruction jobs on her street before arriving at her home — the only elevated home on the block. That day she received a bill from her flood insurer. It was her annual premium, and she was ready to be disappointed.

D'Arrigo, 61, and her husband, Fausto Lopez, had raised their Seadrift Avenue home to three inches shy of 16 feet, well above the 12 feet mandated by the borough and 11 feet required by FEMA. Still, recent interactions with the federal agency that runs the National Flood Insurance Program left her a little nervous.

"I was expecting it to be $3,000, and that would have ticked me off because I was told back in January when I completed everything ... that my flood insurance would be $600," she said last month.

When she opened the envelope, D'Arrigo saw that her annual premium wasn't $3,000. It was $34,396. D'Arrigo's premium had grown 17-fold in a year's time.

"I closed out my IRA. I borrowed a tremendous amount of money, maxed out two credit cards to finish (the home construction) we've done, then I get a $34,000 flood insurance bill," she said. "I can't afford a $34,000 bill; we're in debt up to our ears."

The good news for D'Arrigo, a Rumson travel agent who has lived in Highlands since 2005, is that FEMA recently revised the premium downward to $7,728, according to D'Arrigo and a statement from her insurer, New Jersey Manufacturers Insurance Company. Possibly because she stayed tenacious — calling FEMA, her insurer, a claims adjuster, town officials, U.S. Sen. Robert Menendez's office and the Asbury Park Press for help. Even with the reduction, her premium represents a far larger hike than what homeowners were told to expect after Congress tempered the 2012 Biggert-Waters Flood Insurance Reform Act.

A FEMA spokesman said the agency was looking into this particular situation, but it did not respond to questions submitted by the Press more than two weeks ago except to say that "federal privacy laws prevent FEMA from commenting on individual situations."

A few weeks after the storm, D'Arrigo started hearing the consistent message from up and down the New Jersey political ladder that it was time to start putting their lives back together. Somebody had to go first, and D'Arrigo was ready. In fact, she'd never left her home, which had 6 feet of water on the first floor when water from the Atlantic Ocean and Sandy Hook Bay surged into the borough.

"We lived in this house with no gas, no electric and no water for seven months," she said. "I climbed a 10-foot ladder to get to the second floor."

D'Arrigo said she worked by candlelight to assemble stacks of documents she needed for assistance from the state and FEMA. She borrowed a total of $178,000 to rebuild her home, but it was the $15,000 she received from FEMA to lift her home that is the most curious.

Initially, D'Arrigo's home was designed to be on pilings, which is the preferred method of elevation for homes in the most hazardous flood zone where breaking waves of 3 feet or higher are more likely during a coastal flood.

But when FEMA released new preliminary flood maps this spring, Seadrift Avenue was redrawn into Zone AE, not into a V or VE zone that has the elevated risk for breaking waves. That meant D'Arrigo was free to make an enclosed garage on the first floor of her elevated home while still having the home considered a "conforming" property and, therefore, eligible for all discounts on premiums, for which she was paying out of pocket.

The garage plans were affirmed by every borough official who needed to sign off, then were sent to FEMA for approval and release of half of a $30,000 grant that is available to homeowners who want to rebuild the right way after a flood. They released the $15,000 before the work started, but when she applied for the other half in February, they told her the four-walled foundation of her home was out of compliance with the effective flood map, according to D'Arrigo, documents she provided and New Jersey Manufacturers.

Paul Vitale, construction official for Highlands, said there have been 40 or 50 home elevations in the borough, and he's supervised the planning and construction of every one. D'Arrigo was "one of the first five" to undertake the process.

"She's the only one (who had their premium go up)," Vitale said. "Everybody else I've spoken to, their insurance premium has gone down considerably. We have a couple of homes in town that are paying $400 or $500 a year, and they did the same thing that Claudette did. It's mind-boggling."

A spokesman for New Jersey Manufacturers said D'Arrigo's was "a very unusual case" and that the company had been arguing with FEMA on behalf of their customer. Insurance companies have no wiggle room on how FEMA rates and rules are applied; they only administer the National Flood Insurance Program in FEMA's place.

"This is a very unusual situation in a number of aspects — in premium differential relative to the new (versus) pending maps, the timing, and FEMA's revised determination on the premium," NJM spokesman Eric Stenson said in an email. "All those things are unusual."

Adding another voice in agreement is J. Robert Hunter, who ran the NFIP from 1974 to 1978 but now serves as the director of insurance at the Consumer Federation of America. He called it "a very unusual situation." One positive he notes is that D'Arrigo's pain may only last a couple of months because once the new map is approved her premium will plummet, which Stenson of NJM confirmed.

D'Arrigo said her mortgage servicer sent NJM a check for $3,000, but she was unsure of whether her home was currently insured. The old policy expired on June 16, and NJM declined to share her status with a third party.